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STATEMENT 1In these matters, the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales ("the PSA") has made application for new Awards, namely, Crown Employees (Public Sector - Salaries 2011) Award and Crown Employees (Roads & Traffic Authority of New South Wales - Salaried Staff Salaries and Conditions) Award 2011. 2On 14 March 2011, the Commission made directions for the filing and serving of evidence by the parties and listed the application for hearing before a Full Bench on 1 to 26 August 2011. Conciliation in relation to the PSA's claims was timetabled for 21 and 22 July 2011. 3On 20 June 2011, the Crown Solicitor's Office contacted my Associate by facsimile message seeking to have the matters relisted. The reason for making the request was that the Industrial Relations Amendment (Public Sector Conditions of Employment) Act 2011 ("the Amendment Act") was assented to on 17 June 2011 and, further, that the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 had been made under s 146C of the Industrial Relations Act 1996. The matters were relisted on 23 June 2011. 4The Amendment Act amended the Industrial Relations Act by inserting s 146C, which provides: 146C Commission to give effect to certain aspects of government policy on public sector employment (1) The Commission must, when making or varying any award or order, give effect to any policy on conditions of employment of public sector employees: (a) that is declared by the regulations to be an aspect of government policy that is required to be given effect to by the Commission, and (b) that applies to the matter to which the award or order relates. (2) Any such regulation may declare a policy by setting out the policy in the regulation or by adopting a policy set out in a relevant document referred to in the regulation. (3) An award or order of the Commission does not have effect to the extent that it is inconsistent with the obligation of the Commission under this section. (4) This section extends to appeals or references to the Full Bench of the Commission. (5) This section does not apply to the Commission in Court Session. (6) This section extends to proceedings that are pending in the Commission on the commencement of this section. A regulation made under this section extends to proceedings that are pending in the Commission on the commencement of the regulation, unless the regulation otherwise provides. (7) This section has effect despite section 10 or 146 or any other provision of this or any other Act. (8) In this section: award or order includes: (a) an award (as defined in the Dictionary) or an exemption from an award, and (b) a decision to approve an enterprise agreement under Part 2 of Chapter 2, and (c) the adoption under section 50 of the principles or provisions of a National decision or the making of a State decision under section 51, and (d) anything done in arbitration proceedings or proceedings for a dispute order under Chapter 3. conditions of employment -see Dictionary. public sector employee means a person who is employed in any capacity in: (a) the Government Service, the Teaching Service, the NSW Police Force, the NSW Health Service, the service of Parliament or any other service of the Crown, or (b) the service of any body (other than a council or other local authority) that is constituted by an Act and that is prescribed by the regulations for the purposes of this section. 5The Regulation declares, for the purposes of s 146C of the Industrial Relations Act , aspects of government policy that are to be given effect to by the Industrial Relations Commission when making or varying awards or orders. The Regulation declares certain conditions of employment to be guaranteed minimum conditions of employment (for example, annual leave) that may not be the subject of deletion or reduction for the purpose of offsetting the cost of wage increases. Other conditions of employment, however (for example, overtime, penalty rates, carer's leave, redundancy pay, etc) may be used to offset the cost of wage increases in accordance with cl 6 of the Regulation. Clause 6 provides: 6 Other policies (1) The following policies are also declared, but are subject to compliance with the declared paramount policies: (a) Public sector employees may be awarded increases in remuneration or other conditions of employment that do not increase employee-related costs by more than 2.5% per annum. (b) Increases in remuneration or other conditions of employment that increase employee-related costs by more than 2.5% per annum can be awarded, but only if sufficient employee-related cost savings have been achieved to fully offset the increased employee-related costs. For this purpose: (i) whether relevant savings have been achieved is to be determined by agreement of the relevant parties or, in the absence of agreement, by the Commission, and (ii) increases may be awarded before the relevant savings have been achieved, but are not payable until they are achieved, and (iii) the full savings are not required to be awarded as increases in remuneration or other conditions of employment. (c) For the purposes of achieving employee-related cost savings, existing conditions of employment of the kind but in excess of the guaranteed minimum conditions of employment may only be reduced with the agreement of the relevant parties in the proceedings. (d) Awards and orders are to resolve all issues the subject of the proceedings (and not reserve leave for a matter to be dealt with at a later time or allow extra claims to be made during the term of the award or order). However, this does not prevent variations made with the agreement of the relevant parties. (e) Changes to remuneration or other conditions of employment may only operate on or after the date the relevant parties finally agreed to the change (if the award or order is made or varied by consent) or the date of the Commission's decision (if the award or order is made or varied in arbitration proceedings). (f) Policies regarding the management of excess public sector employees are not to be incorporated into industrial instruments. (2) Subclause (1) (e) does not apply if the relevant parties otherwise agree or there are exceptional circumstances. (3) The relevant parties in relation to a matter requiring agreement under this clause are the employer and any other party to the proceedings that is an industrial organisation of employees with one or more members whose interests are directly affected by the matter. 6Employee-related costs and employee-related cost savings are defined in cll 8 and 9 of the Regulation respectively: 8 Meaning of employee-related costs For the purposes of this Regulation, employee-related costs are the costs to the employer of the employment of public sector employees, being costs related to the salary, wages, allowances and other remuneration payable to the employees and the superannuation and other personal employment benefits payable to or in respect of the employees. 9 Meaning of employee-related cost savings (1) For the purposes of this Regulation, employee-related cost savings are savings: (a) that are identified in the award or order of the Commission that relies on those savings, and (b) that involve a significant contribution from public sector employees and generally involve direct changes to a relevant industrial instrument, work practices or other conditions of employment, and (c) that are not existing savings (as defined in subclause (2)), and (d) that are additional to whole of Government savings measures (such as efficiency dividends), and (e) that are not achieved by a reduction in guaranteed minimum conditions of employment below the minimum level. (2) Savings are existing savings if they are identified in a relevant industrial instrument made before the commencement of this Regulation (or in an agreement contemplated by such an industrial instrument) and are relied on by that industrial instrument, whether or not the savings have been achieved and whether or not they were or are achieved during the term of that industrial instrument. A motion has been tabled in the Legislative Council seeking to have the Regulation disallowed. Debate on the motion is scheduled for 2 August 2011. 7Unlike the Commission's Wage Fixing Principles, the focus of the Regulation is on " direct changes to a relevant industrial instrument, work practices or other conditions of employment" in order to cut costs and produce savings to pay for any wage increases above 2.5 per cent per annum. That may be contrasted with the approach in the Commission's Principles, which focus on increases in work value and productivity and efficiency. Principle 8.3, for example, provides: 8.3 Productivity and Efficiency considerations Productivity and efficiency measures that have delivered substantial costs savings and/or productivity or efficiency improvements or which have made a substantial contribution towards the attainment of the objectives of the employer (including departments and agencies of the Crown) in seeking to become more competitive and/or efficient, to which employees have made a significant contribution, may constitute the basis for increases to wages and salaries or improvements in employment conditions without the requirement to make out a special case, provided that such measures, savings or improvements have not already been taken into account in previous wage adjustments. 8It was submitted by the Minister for Finance and Services, the Director of Public Employment and the Roads & Traffic Authority, that in light of the changes to the law governing the Commission's power to make or vary awards or orders, the timetable for the filing and serving of evidence should be significantly revised. 9The revisions, it was submitted, should acknowledge the need for the PSA to amend its application in order to frame a claim consistent with the new laws and to provide further time to file and serve any further evidence given the new circumstances. Provision should also be made in the new timetable, it was submitted, for the PSA to respond to a request for particulars designed to elicit information from the PSA as to how its claim delivered substantial cost savings consistent with the requirements of the Regulation. 10A revised timetable was tendered by the DPE, which also made provision for a counter claim to be made by the DPE and the RTA. The revised timetable provided for the existing hearing dates to be retained. 11The PSA responded to the proposal for a revised timetable by indicating that: (1) it intended to mount a challenge to the validity of the Amendment Act and additionally or in the alternative to contend that the Regulation is not a valid exercise of the regulation making power in s 407 of the Industrial Relations Act ; (2) the challenge would be made in this Commission; (3) the Commission should hear the challenge then proceed immediately within the existing timetable to deal with the merits of the application and to determine the validity issue and the merit issue together after the hearing is completed; (4) the PSA would not engage in any process whereby it would give up award conditions in order to establish the savings necessary to pay for any wage increases; (5) the PSA intended to rely on the evidence it had filed in the proceedings and did not intend to file any further evidence, nor did it intend to amend its application; (6) given the respondents' position, as the PSA understood it, that the increase of 2.5 per cent provided for in the Regulation was only available if it met the requirements of the Commission's Wage Fixing Principles, the PSA was entitled to press its claim on the basis of the evidence it had filed. That evidence was filed having regard to the requirement of the Principles; (7) if, after hearing the evidence and submissions of the parties in relation to the PSA's claim, the Commission was to conclude that increases above 2.5 per cent were justified the Commission would need to consider the limitations imposed on it by the Regulation; (8) any extension of time for the respondents to file their evidence (which was due on 24 June 2011) and to file any counter claim should be limited to two weeks, namely, 8 July 2011 with the opportunity to respond by 27 July 2011. 12As to whether the Full Bench would accept that the invalidity issue need not be determined until after it had heard all of the evidence and submissions both in respect of invalidity and merit, is a matter for the Full Bench. 13As the PSA is to challenge the validity of the Amendment Act it may be necessary for the PSA to give consideration to the question of notices under s 78B of the Judiciary Act 1903. It may also need to give some consideration to the forum in which it proposes to mount the challenge, but these are matters for the PSA. 14In the course of the proceedings there was some debate about the entitlement under the Regulation to the 2.5 per cent. Arising out of that debate the Commission understood the respondents' position to be that it was not an automatic entitlement, but rather was subject to the applicant satisfying the requirements of the Industrial Relations Act and the Commission's Wage Fixing Principles. That understanding appeared to be acknowledged by the respondents as being correct. 15The Commission put it to the respondents that given its understanding regarding the 2.5 per cent, why could not the PSA rely on the evidence it had filed as at least supporting a claim for 2.5 per cent and, therefore, did not the respondents need to deal with that evidence, regardless of the Regulation? 16As a consequence of the exchange between the Bench and counsel for the parties, it was proposed that the matter adjourn to allow the respondents to seek instructions in order to clarify their position regarding access to the 2.5 per cent increase provided for in the Regulation. 17The proceedings were adjourned until the following morning, 24 June 2011. At that time the Commission was advised that the respondent parties were not in a position to shed any further light on the question of access to the 2.5 per cent increase. Counsel for the DPE, therefore, proposed that the employer parties be required to file any counter claim and evidence both in support of the counter claim and generally by 15 July 2011. Counsel indicated that the evidence would be filed on the basis that the Regulation was valid and on the basis of the PSA's "concession" that the evidence filed by the PSA did not demonstrate employee-related cost savings. 18Counsel for the DPE also proposed a timetable for the filing of submissions regarding the PSA's foreshadowed invalidity argument that being the PSA was to file its submissions by 8 July, the respondents to file their submissions by 22 July and any submission by the PSA in reply by 28 July 2011. This timetable was agreed to by the PSA. The PSA did, however, object to the timetable proposed by the employer parties that such parties have until 15 July to file the counter claim and evidence. It was submitted they should have only until 8 July; otherwise the PSA would suffer prejudice. 19Having heard the parties, the Commission makes the following directions regarding a revised timetable: